Most people have yet to see a new 100,000 kip banknote despite the Bank of the Lao PDR putting it into circulation last week.
At present, commercial banks are distributing the largest Lao banknote through bank tellers alone, so they are not available to ATM users, which include the majority of state employees and private company staff.
A senior official at the Bank of the Lao PDR’s Currency Issuing Department said the department had put the 100,000 kip banknotes into circulation at the start of the month as planned and it is now up to commercial ba nks to distribute the new notes.
“We have been circulating the 100,000 kip banknotes since February 1 as planned,” said the official, who asked not to be named.
He said the central bank had not slowed the banknote’s circulation due to fears it would lead to higher inflation, as some people had suggested, adding that the quantity of notes printed is adequate to enable the central bank to manage inflation.
He said commercial banks had not made the 100,000 kip banknotes available from ATMs due to technical problems, explaining the machines need to be reset before they can dispense the new notes.
The official said the central bank wants commercial banks to dispense a range of banknotes through their ATMs in order to keep both small and large denominations in circulation.
Large banknotes became much more widely used after banks installed ATMs for people to withdraw money from their accounts.
However, this has led to many vendors complaining about a shortage of small banknotes, which they need to provide change.
An official working for a commercial bank said the main reason for the delay in public distribution of the new note was not down to any technical issue with ATMs.
“ATMs can deal with any size of banknote,” he said, adding that it would not take long to fill the machines with the new denomination.
He said commercial banks had rather delayed putting the banknotes into their ATMs on the advice of higher authorities, which do not want to see circulation of the 100,000 kip note inflame public debate amid rising inflation.
The Bank of the Lao PDR announced at the end of last month that circulation of the 100,000 kip banknote was necessary to enable businesspeople to more easily carry around large sums in the Lao currency.
At present, commercial banks are distributing the largest Lao banknote through bank tellers alone, so they are not available to ATM users, which include the majority of state employees and private company staff.